Twittagra: Twitter's Low IPO Price Propels the Social Media Giant Right Off the Bat

By Bryan Wiener The most anticipated IPO since Facebook, Twitter TWTR finally allowed the public to purchase its common stock on the NYSE last Thursday morning. Initially offered to its lead underwriters at Goldman Sachs for $26 per share, the social media stock opened at $45.10 per share after a lengthy delayed opening by Barclays Capital, whom Twitter selected to be the Designated Market Maker (DMM) on the NYSE floor. The DMM processes pre-market buy and sell orders to create a balanced opening price, which is done every morning on the Big Board. To say the least, the first day of trading went much more smoothly than that of Facebook FB, which IPO'd on May 18, 2012. Then the most anticipated public offering, possibly ever, Facebook's IPO was marred by a technical glitch at the computerized exchange and seemingly high valuation. Facebook's underwriter, Morgan Stanley, had to go so far as to support the IPO price of $38 on its opening day. The 140 character messaging site, which analysts are still trying value its revenue growth potential, avoided this debacle in selecting the NYSE as its home and Goldman Sachs as its primary trusty. In choosing one of the last trading floor venues in the world as its primary exchange, Twitter was born with a public-facing image. With Goldman Sachs, the social media stock put its pricing integrity in the hands of one of, if not the, most trusted and respected investment banks in the world. Twitter essentially chose to err on the side of caution. It may have been to its demise, as the stock opened 73% higher than its calculated IPO price. But Twitter is not Facebook and its course of action in becoming a publicly traded stock was not the same. Its insiders did not choose to sell off their shares, unlike its social media rival. That may have led to its accelerated per share evaluation as its offering date drew near. Facebook insiders wanted to get their equity out while Twitter's insiders merely want to cover expenses. It's a difference in culture and investment climates. Which one will prove right in the long run is the only thing that remains. TWTR options begin trading on November 15. They should provide profitable opportunities for volatility traders and long term investors right off the bat.